What is the Undeposited Funds Account in QuickBooks?

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What is the Undeposited Funds Account in QuickBooks?

The Undeposited Funds account in QuickBooks is a holding account. It represents the step in between when you receive payment from your customer and when it is actually deposited in your bank. It can be in form of cash, check, or credit card sales made but funds have not yet posted to your bank account. If accounted for properly, the Undeposited Funds account will balance to zero once you have deposited to the bank all received customer payments on hand.

What is an Example of the Undeposited Funds Account in QuickBooks?

Say for instance you have a customer with an open invoice that sends you a check. You go into QuickBooks and receive the payment against the customer invoice (and select to use the Undeposited Funds account). You decide to wait a few days until make a trip to the bank. At this point, because you have received the payment from the customer, that customer invoice appropriately shows that it was paid. However, these funds are not available in your bank account yet. This is where the Undeposited Funds holding account comes in. Once the check has been deposited to the bank, the deposit in QuickBooks then clears that particular balance in Undeposited Funds.

Why do I have a Balance in my Undeposited Funds Account?

A few reasons you may see a balance in your Undeposited Funds account:

  • You posted your deposit from the wrong account. If you receive the payment in Undeposited and make the deposit against a different account (may sales or accounts receivable), you have duplicated entries in your accounting files and will have an unresolved balance in Undeposited Funds that must be corrected.
  • A check or payment was lost, stolen, or otherwise never made it to the bank.
  • You have payment receipts dated later than the deposit. This discrepancy will need to be located and dates updated.
  • Your QuickBooks file may have damaged or corrupted files or transactions. This will need to be corrected in order to resolved this issue and prevent further damage to your QuickBooks file.

How Can I see what the Balance in my Undeposited Funds Account consists of?

Please watch my video to see a step by step tutorial on how to determine which specific transactions are remaining in your Undeposited Funds Account.

NEED HELP?

If you have a balance in your Undeposited Funds account due to not using the Undeposited Funds account correctly, please contact us to help you get your accounting in QuickBooks back on track. Call me at 720-381-4626 or email me at jfranz@bookkeepingservicesonline.com

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